Is your organization ready for Digital Leadership?

Amit Dugh & Ravi Dugh, May 29, 2020

Digital Transformation is not just another buzzword anymore.  This process requires an organization to have data digitized. Therefore, the digital transformation of an organization is a necessary condition for being a digital leader. As data become the new currency in the information age, algorithms become the core of business excellence. Successful businesses are those that are capable of redesigning their businesses for the new digital age. I say the new digital age because we are using data to make better decisions, and with this computing power, we are shaping the competitive landscape using data.

Further, it is not only the use of data alone but also algorithms coupled with human decision-making that will determine your success or failure in the new digital age.  At the heart of algorithms is data. All organizations have all sorts of data generated at various points in the value chain.

So, is your organization ready for digital leadership? The maturity of your organization depends on how it manages its data. Roughly, digital transformation maturity can be divided into four levels.

Let’s start by thinking about how your organization currently manages and uses data.  The answer to these four questions below will determine your AI readiness and digital maturity:

  • Do you have data in silos? You perform a fundamental analysis of your data with KPIs. Data analysts distributed across the organization but only serve specific department functions.
  • Do you integrate data across the value chain to make sense of what happened? You have the diagnostic ability to perform advanced analysis, including historical trends and KPIs across the value chain. Typically, this is a business intelligence function in an organization.
  • Do you have the ability to predict using the data? You can predict what will happen and have forward-looking indicators. You have a data science team that generates insights to drive business decisions.
  • Do you ability to make something happen? You can utilize algorithms to optimize business in real-time to drive decisions and improve KPIs.  You have an established data science team across the organization with business managers who are taking strategic decisions to stay ahead of the competition.

Most organizations will fall across various maturity levels depending on how they use data across their value-generating functions. To assess an organization’s data maturity, you have to look at the core functions, e.g., production, supply chain, marketing, sales, customer service, etc. that generate the most value for the organization and evaluate its digital readiness.  Also, not all functions in the organizations can lead to a big difference in its digital competitiveness.

Data-driven companies dominate the markets as you can see, the market capitalization of data-driven companies has been higher than they have ever been in the past.

Data-Driven Transformation_ex01_tcm-156855.jpg
Source: BCG

According to a survey by Deloitte, digital maturity translates to better financial performance.

Source: Deloitte

Innovation is at the forefront of the digital economy, and many countries compete for the digital leadership position. See below chart depicting the data maturity of companies for the top 8 countries.

Data-Maturity by Country.png
Source: BCG

Data is an essential input in this information age, and data with human interaction (decision making) is going to be the new profitability lever for the new digital age. A massive digital transformation happening in almost every industry and digital maturity will separate winners from losers.



Career Strategy: Six steps to command higher salaries

Amit Dugh & Ravi Dugh, May 19, 2020

Career change or choosing a career is fundamental to all individuals. This article will provide a decisive strategy for choosing the profession, and the skill-set needed to go along with it for a prospective future and command higher salaries.

In tough times of COVID 19, it is important as many individuals have been laid off or either at the risk of being laid off. Those who are about to start their chosen career have mixed opinions due to uncertainty about their career options. Students going to university or college wonder if their choice is right or wrong, only time will tell. Back in the 20th century, I heard wise men say rolling stone does not gather mass. It was unique to the Baby boomer generation, where loyally was vital, and staying in one job was possible for years. In the 21st century, the situation I have observed is that rolling stone gathers mass. The newer generations have different priorities and are not scared of changing jobs to get something better. So what did change other than the way generations think and behave?

There are six key questions to be answered to complete the career strategy, and the whole process is iterative. These include working rights, demographics, industry profitability, return on knowledge, risk of automation, and degree of differentiation. These are below:

  • Working Rights: What are the working rights of an individual or where the individual does not need approval to be employed. Answer to this question is highly dependent on the citizenship of the individual. For example, A German national has full working right in all of the European Union, whereas a Chinese national has full working rights in all the Chinese territories. Similarly, the nationality of the individual decides the market where he or she is employable. It is important to note that working rights in some advanced countries can be made easy by studying. Graduating students can apply for a post-graduation work permit as a way to increase the skill set and possibly change the individual’s citizenship as long as they meet certain criteria.
  • Demographics: Understanding the market dynamics and demographics of the market in focus is essential for the individual. It is like trying to understand the demand and supply of employable individuals in need. See below demographics by country explained.
Japan Demographics - 2020 - Notes.PNG

Looking at the demographics of Japan, we can see the employment age envelope highlighted by yellow on the left from 20-24 to 60-64 yrs age group. The percentage of population exiting the working age in the next few years will be about 6%. The incoming population percentage will be 4.5%, which shows that the numbers of individuals seeking jobs are likely to reduce by 1.5% over the next five years. It indicates a decrease in competition to be hired, assuming that the economy continues to grow.

China Demographics - 2020 - Notes.PNG

Reviewing the demographics of China, it can be said the percentage of population exiting the working age in the next five years will be about 5.4%, and the incoming population percentage will be 6%. It shows that the numbers of individuals seeking jobs are likely to increase by 0.6% over the next five years. It offers an increase in competition to be hired if everything else remains the same.

India Demographics - 2020 - Notes.PNG

Reviewing the demographics of India, it can be said the percentage of population exiting the working age in the next five years will be about 4.3%, and the incoming population percentage will be 9.1%. It points out that numbers of individuals seeking jobs are likely to increase by 4.8% over the next five years. It shows a significant increase in competition to be hired if everything else remains the same here. It is crucial to consider that the younger population joining the workforce will drive consumption and provide a boost to the economy. However, the rewards of economic growth don’t go proportionately to all the sectors of the economy. Further, based on competitiveness, growth scenarios, some skills may be highly valued vs. some others.

  • Industry Profitability: One of the most critical factors for selecting your next opportunity is industry profitability. A highly profitable industry generally offers higher salaries and better perks. While reviewing industry profitability, one has to check industry growth as well. A growing sector provides better employment opportunities.

  • Return on Knowledge: One factor in the industry is the value of your skills. If you are in a profession in which your accumulation of knowledge improves your ability to command higher salaries, then you are well-positioned. On the flip side, if you are in a role where your skills don’t depend on knowledge but non-cognitive factors (e.g., driving, etc.), then with experience, you won’t be able to command substantially higher salaries.
  • Risk of Automation: Further, one important factor to consider is automation, i.e., is your job subject to automation? Job functions that are regular and non-cognitive are most susceptible to automation.
The impact on jobs - Automation and anxiety | Special report | The ...


Degree of Differentiation: An individual providing services as an employee to a company can be considered as a product. For an individual to demand a good salary, it is vital to choose the career which is a niche. Job seekers can differentiate their skill set from what is available on the market in a few ways.

  1. Low-cost provider: If a career that requires commoditized skills (i.e., a mature industry with ample supply of talent) is selected, it is imperative to analyze how the individual can differentiate with an additional skill set. For example, a skilled accountant does not distinguish themselves from other accountants. It means that when applying for a job where an accountant is needed, and no different specific skill set required, the salary for such position is meager. It is categorized as a “Low-cost provider,” or the job has no differentiation.
  2. Stuck in middle: For a job seeker to move away from being a low-cost provider, one must find ways to differentiate. For example, an accountant who is skilled and has specialized certification or accreditation like an accountant is a CA – Certified Accountant. It will make the accountant different from another to a degree but may not be highly differentiable, which could be categorized as “Stuck “in the middle. Such career profiles have better job opportunities than those which are categorized as “Low-cost provider.”
  3. Differentiate: Carrying on the example from above with the accountant, if the accountant is a CA – Certified Accountant, and has a skill-set in using particular ERP software systems like SAP, Oracle, etc. It makes this accountant highly different from another and provides the ability to demand a higher salary and better job security.

With differentiation, a career can be shaped to command higher salaries. Job seekers can move up the pyramid, and the competition reduces.

                In conclusion, the six steps can be used as an iterative process to work out a career strategy. This career strategy can be used along with the likings on an individual or as a supplement to enhance the prospect of commanding better working conditions and job security.



Data Science: What is it, and how to benefit from it?

We are living in the information age, and in this age, data is the currency of the digital economy. This article is aimed at how businesses and job-seeking individuals can leverage and benefit from Data Science.

Amit Dugh & Ravi Dugh, May 13, 2020


The science of using data to drive efficiencies, create new products, and deliver business value is called Data Science. It is a multi-disciplinary field with elements of statistics, programming, and business.  Data can be turned into insights to increase efficiencies, reduce costs, identify new opportunities to gain a competitive advantage. Data scientists deploy techniques for data analysis, data visualization, data mining, and also machine learning. Data Science is about uncovering findings that are central to the strategic business value (Lo).

Source: IPHS Technologies via

Data Science for Businesses

The importance of Data Science can be easily shown by the below figure depicting the market capitalization of the Top companies in the world. Companies in Energy, Financials, and automobile sectors haven fallen in rankings. The rankings of data-driven companies are on the rise.

Source: S&P Capital IQ & BCG

Further, when we closely review the industry sectors, the data-driven transformation has impacted the sectors unevenly.

Source: BCG

According to the BCG analysis, we can see that China has the most advanced technology companies by number. However, the US is the leader when viewed from data maturity. The below chart depicts the world leader in data-driven innovations.

Source: BCG

In order for the businesses to maintain and leverage data science competitive edge, they must incease their data-driven maturity by accelerating data transformation.

Data Science Careers for Individuals

Harvard Business Review in 2012 referred to Data Scientist as “The Sexist Job of 21th Century”.  This title still holds, and the field is still undergoing a massive change. In the age of the COVID19 pandemic, the Digital economy is accelerating even faster than before. Based on the latest statistics, we can see that global social media users are have not even reached 50%. Unique mobile phone users are about 66% of the population.

Source: Hootsuite

These statistics are expected to increase based on the Hootsuite report. With more digital growth comes the data collection and the insights that can be drawn out of this data. Such insights have been described above in the business section as to how it can be leveraged for increasing revenue and reducing costs in short an effective tool to have a competitive edge over others who do not use it.

Source: Hootsuite

Now let’s look at the report by the World Economic Forum report “Jobs of Tomorrow: Mapping Opportunity in the New Economy” where it is reported that the demand for both “Digital” and “Human” factors are the critical drivers for growth in jobs of future. Careers in Data and AI professional clusters are expected to increase by about 16% from 2020 to 2022.

Source: WEF (World Economic Forum)

The below figure points out the top 10 emerging jobs and respective skills required in the Data and AI professional job cluster as described by WEF.

Source: WEF (World Economic Forum)

Now that we have seen prospective career opportunities, we need to identify the job roles, the skills required to perform the jobs, and the respective salaries that are associated with the job roles.

The job roles in data science can be roughly divided into, data analyst, data architect, statistician, database analyst, machine learning engineer, data engineer, data scientist, and data & analytics manager. The roles of a data analyst, machine learning engineer, data engineer, and data scientist are core data science roles. The following is a summary of skills (Nelson):

Source: Sam Nelsom &

Often Data Science can be interchangeably used with Analytics, but there are differences, and a lot depends on the context. Analytics is about analyzing the data, e.g., using existing dashboards. Data Science is diving into data at a granular level to find patterns. Data Science requires a complex skillset in mathematics, technology, and business.

Sources: Various &

The jobs roles can also be described based on the work being performed, or the hierarchy of the Data Science needs as per below:

Source: Monica Rogati

Machine learning (ML) engineers are the intersection of computer science and data science. They are expected to program algorithms that can be used at scale for making decisions (e.g., pattern matching). Machine learning engineers often focus on writing production-level codes to develop computer systems or software robots. ML engineers typically take inputs from data scientists to build APIs to ensure real-time smooth functioning of a technical model that requires some inputs and generates some outputs to make business decisions.

Data Science industry is fast changing. In 2020, new titles have emerged in the sector (ODSC); these include:

  • AI Product Manager
  • AI Architect
  • Information Security Analyst

It is important to note that Data Science salaries are higher than other computer occupation salaries.

Source: Glassdoor

According to BLS (Bureau of Labor Statistics), Computer and Information Research Scientists have median wages of $122k with a projected growth rate of 16% for 2018-2028.

Source: Bureau of Labor

Now, let talk about individuals with skills from business and are looking for a mid-career more. How exactly can such job-seeking individuals leverage their business skills to get data science jobs.


Individuals with domain expertise and analytical skills can go onto learning data science courses available online to build and redirect their careers into Data Science applications in their respective domains. A list of online websites offering Data Science Professional Certifications is available below.


We believe that data science has a huge potential, especially considering as many industries are going through digital transformation. The technology-driven change will continue, and as such, the creative and critical thinking skills required to solve business problems will be in high demand.



Blockchain Technology: What is it, and how to benefit from it?

The world is undergoing digital transformation to not only meet the needs of the customer better but also to stay competitive, and Blockchain technology has a big role to play. Both businesses and individuals can benefit from the implementation of this technology. This article offers two perspectives: a quick summary for companies to gain a competitive edge using blockchain, a brief overview of a future career & courses in Blockchain technology for individuals.

Amit Dugh & Ravi Dugh, May 3, 2020


In an ever-changing world, Charles Darwin’s theory of “survival of the fittest” is still apt. We as humans continue to thrive, and it is in our DNA to stay ahead of the curve, stay competitive. During this moment of COVID-19 pandemic, when the world is being reset by the new normal of social distancing.  We would like to bring the focus of individuals and businesses about the need to transform using the latest and cutting edge Blockchain technology.

With the invention of Bitcoin in 2008, came along the “Blockchain Technology,” which was the backbone of this new cryptocurrency system. It was the record-keeping technology based on distributed, decentralized, and public ledger. The technology can be described as a chain of blocks of information. Each block carries three key digital pieces of information.

  • Information about the transaction like date, time, the value of the transaction
  • Information about the parties involved in the transaction
  • Unique “hash” or cryptographic code to distinguish one transaction from another

Alright, we understand that Blockchain is an information chain containing transactions, but who creates it, who stores it, and how can we check it. So let’s take a quick deep dive into its working with five simple steps:

  • A transaction is requested
  • Information of this transaction is pushed via Peer to Peer network to each node
  • Each node validates the transaction using an algorithm
  • Approved transactions are represented as blocks of data and added to “public” ledger
  • Block is added to the existing chain of transactions and its permanent
Source: G2Crowd

Blockchain Benefits for Businesses

Every shareholder wants to own shares of a business that is competitive, sustainable, and profitable. With the latest lockdown measures due to COVID19 being implemented all across the world, as a business owner, we are interested in understanding what strategy is best to align, transform, and grow to maintain the competitive edge and stay ahead of the curve. There are two ways of approaching this, one by reducing cost and other by increasing revenue. Blockchain technology can be deployed to ensure profitability, but where do we invest my money to achieve this. Let’s take a look at the picture below showing the advantages of Blockchain technology.


With a quick look at the picture, we can already see how the cost of operations can be easily reduced by implementing Blockchain technology.

  • Reduced transaction cost by removal of trusted 3rd party intermediaries
  • Fraud prevention and more secure due to consensus, encryption and linked to the previous information block
  • Reduced cost due to automation of the operations

To see how the revenue can be improved using the Blockchain Technology, let’s review the latest study performed by Boston Consulting Group & Cisco on “Stamping out counterfeit goods with Blockchain and Internet of Things (IoT).” This study evaluated the impact of combining Blockchain technology with IoT to prevent counterfeiting, where 60-80% of the counterfeit sales were reduced. This reduction in counterfeit sales results in approx. 3.85% increase in revenue, with the total net benefit ranging from 2% to 5% of revenue.

Source: BCG

Based on the above study and analysis, a business can implement Blockchain technology not just to reduce costs but also to increase revenue. To understand the application of this technology, we can review the value at stake figures across the top sectors.

Source: Mckinsey

As a business, the following strategic approaches for blockchain could meet the needs of customers and industry.

Blockchain strategy.PNG
Source: McKinsey

Blockchain Careers for Individuals

Blockchain technology is very recent and is still in the early growth phase. Gartner forecasts that the business value from blockchain will reach $360 billion by 2026, surging to $3.1 trillion by 2030. Individuals and businesses who want to stay ahead of the growth curve must act to get their skill set, and blockchain application opportunity identified. Such opportunities must be strategized for implementation, depending on the business cycle and individual situation.

Source: Gartner

Some of the key advantages of opting for a career in Blockchain technology are below:

  • Superior pay
  • Work flexibility, i.e., remote work option
  • Latest technology – easy to differentiate from other IT jobs
  • Job security – Jobs in demand and high industry growth expected

There are tremendous job opportunities available for individuals with skills in Blockchain. Some of the key jobs roles are defined as per below:

  • Blockchain Developer: Most of the Blockchain development requires the following skillset
    • Databases as (flat and relational)
    • Data structures (Tree, LinkedList, HashMaps, Stack, etc…)
    • Object Orientation Programming (OOP)
    • Programming languages – (C, C++, Node.JS, Java, Python, etc…)
    • Networking
    • Blockchain Architecture – (cryptographic hash functions, consensus, distributed ledger technology)
    • Smart contracts and Web App using Blockchain technology
Types of Blockchain Developers - Blockchain Developer - Edureka
  • Blockchain Solutions Architect: Blockchain solutions architect is responsible for understanding the needs of the business, prioritize the issues, and develop architected Blockchain solutions to enable the high-value offerings to the company.  Typically, the position is customer facing and also needs to communicate with the development team and get involved on the coding side with onshore/offshore development resources. They always stay up to date with the latest technology and solutions being offered.
  • Blockchain Architect: Blockchain architect is responsible for tailoring the architecture of the system, which satisfies the nature of the business, its needs, the stakeholder requirements, and achieves the desired objectives taking into account the constraints at play.
  • Blockchain Quality Engineer: Blockchain quality engineer is responsible for conducting the testing and automation of the Blockchain framework. They test for bugs & loopholes in applications to achieve the desired quality.

Many other roles are mentioned below:

  • Blockchain Project Manager
  • Blockchain legal consultant
  • Blockchain web designer
  • Blockchain software engineer
  • Solidity developer
  • Architect- Blockchain security
  • Blockchain technical developer
  • Cloud Engineer with Blockchain protocol

Online Courses in Blockchain

  • EDX ( – EDx is currently offering numerous blockchain courses. These can be classified as Professional, MicroMasters Program, and other courses.
Professional CertificateMicroMaster’s Program
BerkeleyX – Blockchain FundamentalsIUx – Information Systems
LinuxFoundationsX – Blockchain for BusinessUQx – Corporate Innovation
LinuxFoundationsX – Developing Blockchain-Based Identity Applications 
HKUx – FinTech 
  • COURSERA (– Coursera is currently offering numerous blockchain courses. These can be classified as MasterTrack™ Certificate, degrees, and other specialized courses.
SpecializationsMasterTrack™ Certificate
Duke University – Entrepreneurial Finance: Strategy and InnovationArizona State University – Software Engineering
INSEAD – Blockchain RevolutionDuke University – Blockchain Applications
INSEAD – Blockchain Revolution in Financial Services   
NewYork Institute of Finance – Supply Chain Finanace and Blockchain Technology 
University of Buffalo – Blockchain 
  • Numerous courses offer at UDEMY to gain a specific skill set.
  • Blockchain Council offers numerous classroom and online courses ranging from online degrees to certifications.
Specializations Certifications & Degrees
BlockchainBlockchain ExpertBlockchain
DeveloperBlockchain Architect
Blockchain SpecializationBlockchain & Digital Marketing
ProfessionalBlockchain & Healthcare Professional
Blockchain & HR Professional
Blockchain & Law Professional
Blockchain & KYC Professional
Blockchain & Finance Professional
Blockchain & Supply Chain Professional
HyperledgerHyperledger Expert
Hyperledger Developer
CordaCorda Expert
Corda Developer
Corda Architect
QuorumQuorum Expert
Quorum Developer
BitcoinBitcoin Expert
EthereumEthereum Expert
Solidity Developer
Smart Contract Developer
CryptocurrencyCryptocurrency Expert
Cryptocurrency Trader
  • EDUREKA ( – Certificate – Blockchain and Ethereum Certification Training – Online
  • SIMPLILEARN ( –Certificate – Blockchain – Online

There are many more courses available all over the world, which helps a prospective individual develop knowledge and skills to gain in the field of Blockchain technology.


In conclusion, it is essential to note the impact of digital transformation on companies and individuals with the implementation of Blockchain Technology. Plenty of opportunities exist for businesses and individuals to maintain a competitive edge and stay ahead of the curve.  

Work Citation


Four Key Factors For Successful Career Transition

Understanding four factors will enable you to be:

  • Strategic – Know yourself,
  • Informed – Know your job market,
  • Resourceful – Gather all resources that you can,
  • Organized – Execute your plan.

Ravi Dugh, May 2, 2020

If you are in career transition, there are 4 key factors that determine the success of your transition.

1.      Internal Factors: Your strengths, weaknesses, and goals

The next opportunity should align with your strengths and long-term goals. Continue to develop your strengths and prepare for your dream career. Don’t worry too much about your weaknesses but take action. Remember everybody has weaknesses, accept them, and take steps to mitigate them. Be clear about your goals. Often there is not a clear straight path to your goal or the goal may change as you learn more about yourself in life. It is all right, just keep marching towards your intermediate goals that are aligned with your long term goals.

2.      External Factors: Target industries, companies, and the job market.

Understanding the opportunities that are available to you and the challenges that you will face is important. Knowing the companies that are aligned with your values is important to get the right career fit. Familiarizing yourself with the job market as it also determines a lot of things including how much salary you can make, etc.

3.      Resource Factors: Professional & social network, technology & tools, and savings

Your resources can help you find a great career opportunity. So, use them. Connect with your network to gather information, advice, and if possible, referrals. Actively network in your area of interest, keep your LinkedIn profile updated and keep an eye on your career-specific job boards to apply for suitable opportunities, and finally understand & manage your finances to smoothly transition.

4.      Execution Factors: Transition plan, search process, and learning

We do not plan to fail, we fail to plan. Nothing happens without a plan and blindly applying for any job is not a plan. Follow a daily schedule to search for opportunities and network. Finally, keep learning to stay current in your skills.

No alt text provided for this image

To have a successful career transition, you need to have confidence in all the four factors above. Good luck to all those who are thinking about or in the midst of a career transition!

I hope this article is of some help and motivation to those who are going through a career transition because of COVID19 or otherwise. I hope you found this article useful. Stay focused, and let’s help each other. Best of luck in your search!

If you know anyone who is in career transition, share this article to support them. 

Works Cited

Featured Image Credit: Photo by Estee Janssens on Unsplash


FinTech and Financial Stability

Offering innovative financial services requires data-driven applications of financial technologies. Issues of security and privacy play an integral role in maintaining financial stability.

Ravi Dugh, January 17, 2020

Financial technology (FinTech) enables the rapid innovation of financial products and services. This presents both opportunities and challenges from a financial stability perspective. The key areas from policymakers and regulators’ perspective are operational risks from third-party service providers, cyber risks, and macro-financial risks.

In my opinion, the highest priority issue is related to managing operational risks from third-party providers. Often, a quicker time-to-market may mean that not enough due diligence was done to address the risks of technology adoption. According to a survey (Gai, Qiu and Sun), a breakthrough in technologies such as big data, image processing, mobile networks, etc. has created complicated integrated systems with distinctive demands for financial services offerings. From a technical perspective, both the financial industry and regulators should consider issues across five dimensions: security and privacy, data techniques, applications, facility and equipment, and service models.

Security & Privacy
Source: Gai, Keke, Meikang Qiu and Xiaotong Sun. “A survey on FinTech.” Journal of Network and Computer Applications (2018): pp.262-273.

A summary review of the issues is presented below.

  • In FinTech applications, security and privacy are paramount; for example, in payments, money transfers could risk data of many consumers if privacy by design principles and cyber-security practices are not followed by FinTechs.
  • Data techniques are critical as many technology systems become important to provide services. For example, in P2P lending data-oriented issues become a priority as data use via data analytics and models will play a key role in as both hardware and software required to provide the services become critical to the functioning of the FinTech services.
  • FinTech applications and their management are essential as their wide adoption can change industry practices e.g. Robo-advisors that rely on machine learning and algorithms, can provide speed efficiency and cut costs to serve customers, and therefore, regulators should consider financial data governance frameworks. If third parties are concentrated, then this could increase operational risks as parties are interdependent.
  • The use of facilities and equipment will also be a high priority. Data controls in the cloud can have unpredictable vulnerabilities due to the usage of virtual machines and physical locations of servers which may come under different regulatory environments. This may also pose legal risks.
  • New FinTech service models that require high computing performance or integrations with smart city or cloud computing could also present cyber and operational risks.
Security & Privacy in FinTech
Source: Gai, Keke, Meikang Qiu and Xiaotong Sun. “A survey on FinTech.” Journal of Network and Computer Applications (2018): pp.262-273

In summary, FinTech companies will get first-mover advantage with their unique business models but incorporating cybersecurity and privacy principles will reduce the risks associated with the new business models and promote financial stability.

Works Cited

FSB. “Financial Stability Implications from FinTech.” 2017.

Gai, Keke, Meikang Qiu and Xiaotong Sun. “A survey on FinTech.” Journal of Network and Computer Applications (2018): pp.262-273.

Featured Image Credit: Photo by Aaron Sebastian on Unsplash


Uber is relying on network liquidity to turn to profit

Improving margins for Uber is dependent on the network effects of liquidity provided by drivers and riders. For the quarter ending December 31, 2018, Uber had 91 million and 3.9 million, MAPCs (Monthly Active Platform Consumers) and drivers, respectively.

Ravi Dugh, May 4, 2019

Uber is the world’s largest ridesharing platform. In 2018, The company had Gross Bookings of $49.8B, revenues of $11.3B, and Gross Platform Adjusted Contribution Margin of 9%.  Uber is not profitable and had a net loss of about $4B in 2017 and $1B in 2018.

How does Uber plan to improve margins and grow profitably?

Uber aspires to have the largest network in each market to improve margins by creating a network liquidity effect (Figure 1).

Figure 1[1]

The company uses promotions and incentives to attract both drivers and customers to increase liquidity in the network. This practice results in negative margin until the company achieves a network size. Once the company reaches an operating level then, it slowly plans to take the incentives away. Uber goes on to state that its margin advantage depends on alternatives such as the cost of personal vehicle ownership. Specifically, as per S-1 filing, Uber says,

“In addition to competing against ridesharing category participants, we also expect to continue to use Driver incentives and consumer discounts and promotions to grow our business relative to lower-priced alternatives, such as personal vehicle ownership, and to maintain balance between Driver supply and consumer demand.”Uber S-1 Filing

Above information yields two conclusions:

•    As competition in ridesharing services increases, margins will come under pressure. Also, hailing taxis may be cost-effective in many cases as Uber charges surge based pricing.

•    Uber’s return to profitability is linked affordability to own a personal vehicle.

How do alternatives to Uber determine liquidity in its network? Uber did about 26 Billion miles in 2018 with Gross Bookings of $49.8B. So, the average of Gross Bookings per miles comes out to be $1.91, and it is $1.19/km. Although it is just an average over whole operations, the cost of hailing taxi rates per mile across the world[2] are comparable to get insights. It is cheapest to hail a ride in Cairo at $0.10/km, and it is most expensive to hail a ride in Zurich at $5.19/km. Given that the cost of vehicle ownership varies across the world[3], the driver incentives to participate in Uber’s network will also vary.  From a driver perspective, it will be income generation capability that will motivate them to participate in Uber’s network vs. others. From a consumer perspective, if it becomes cheaper to own a vehicle, then more people will own cars as opposed to taking a Uber ride. Generally speaking, if the cost to own a private vehicle increases, then Uber makes more money and vice-versa. 

Figure 2[4]

In summary, it will take a dominant position in the market to improve the margins as in network effects businesses, the winner earns a disproportionately big chunk of the industry profits. Further, any short term incentives for drivers and customers will be reduced over time. The cost-effectiveness of personal vehicle ownership will keep a cap on Uber’s ambitions to penetrate the total serviceable market (Figure 2). The fundamentals of sharing economics are strong but it remains to be seen how Uber returns to profitability.  

[1] Source: Uber’s S-1 Filing



[4] Source: Uber’s S-1 Filing

Featured Image Credit: Photo by Aaron Sebastian on Unsplash